09.20.10 7:35 AM ET

It’s a sensitive season for Steven Rattner.

The former New York Times reporter turned fabulously wealthy investment banker and Democratic Party fundraiser has a book to promote:
Overhaul, his dishy, behind-closed-doors chronicle of White House machinations during his six-month stint last year as President Obama’s “car czar,” with the mission of saving the auto industry from financial ruin.

“I don’t view this book as a kiss and tell or a tell-all or anything of that sort,” Rattner insists, abstemiously nursing a sparkling water while I drink a light beer at Bemelmans, the storied bar at Manhattan’s famed Carlyle Hotel. He’s a soft-spoken, mild-looking man of 58, a picture contrary to his wild success in a profession that rewards coldblooded focus and killer instinct. “I could have written a book in which everything was all sweetness and honey and light, but nobody would have believed it and nobody would have read it. I think this is still a really positive story about something that Washington can do that actually works.”

Indeed, Rattner’s narrative of how Barack Obama and his team rescued General Motors, Chrysler and Ford is—despite a liberal dollop of clashing egos, palace intrigue and score-settling—a White House success story. But his former administration colleagues are less than thrilled with the publication of some juicy and politically problematic anecdotes, such as White House chief of staff Rahm Emanuel allegedly exclaiming “Fuck the UAW!” during the deliberations of the president’s auto task force—potentially antagonizing a key Democratic support group less than two months before the midterm elections.

"I could have written a book in which everything was all sweetness and light, but nobody would have believed it and nobody would have read it," Rattner says.

“Rahm never said it,” claims a White House spokeswoman, who also disputes Rattner’s account of Emanuel at one point musing dangerously, “Why even save GM?” A second White House spokeswoman adds: “Throughout the entire process that saved the auto industry, Rahm tirelessly defended and advocated on behalf of the auto workers. Any suggestion to the contrary is simply ridiculous.” That’s a lot of high-level grousing.

Meanwhile, Rattner remains ensnared in grueling state and federal investigations of his role in the payment of more than a million dollars in alleged kickbacks to a political consultant in order to gain lucrative New York state pension fund business for the Quadrangle Group, the investment firm he founded a decade ago and left to join the Obama administration as a Treasury Department advisor. He abruptly returned to private life in July 2009 as the investigations were heating up.

Five months ago, Quadrangle threw its founder under the stretch limo, issuing a humiliating public condemnation—"We wholly disavow the conduct engaged in by Steve Rattner"—while paying a $12 million fine to settle with New York authorities, who still have the option of suing Rattner. The Securities and Exchange Commission is reportedly seeking to punish him by barring him from his livelihood for up to three years. Rattner maintains he did nothing wrong.

“It is still an ongoing matter so I’m really precluded from talking about it,” he tells me. “All I would say is that it was by far the most painful—it’s not over, so it continues to be—the most painful professional experience of my life. We all go through life with people not liking us, liking us, agreeing with us, not agreeing with us. But I’ve always tried—maybe not always successfully—to conduct myself with integrity and professionalism. So to have that questioned is very, very painful. Whether I deserve to have it questioned or not, I can’t talk about. But it’s very painful.”

Since Rattner is not the first high-profile figure, and certainly not the last, to enter the federal government only to attract scrutiny and endure an investigatory crucible, I ask him if that’s a disincentive to public service.

“It would take a lot for me to want to go back and do that again—I think it’s a shame,” says Rattner, who writes in his book that he spent $400,000 in legal fees alone just to comply with the vetting necessary to join the administration. “Because I know so many people in New York who came up to me to say, ‘You’re so brave to go down there, I would never go down there. Why would anyone subject themselves to this kind of scrutiny? Who would want to go through that?’ I get that. I think they’re right. But I think it’s a tragedy for the country that it’s so hard to get people to go to Washington. I think there are a lot of great people in the administration, but I think there are also a lot of great people who wouldn’t do it on a bet.”

The former Times Washington bureau reporter—who jumped to a career on Wall Street in the 1980s—is especially bitter about the aggressive manner in which the newspaper has covered his troubles, never mind that Times Chief Executive Arthur Sulzberger Jr. is one of his oldest and closest friends and star columnist Andrew Ross Sorkin is also a pal.

“I think their coverage was over the top,” Rattner tells me. “The idea of putting my—what did you call it?—‘spot of bother’ on the front page five times, and not once for anything I did on autos, was over the top. Why they did it, you have to ask them.”

He goes on: “I think the more benign explanation is that I was a public figure for much of the time, I was a known figure for all of that time; I wasn’t some guy nobody ever heard of, for better or worse. And so it’s like, the more visible you are, the more you’ll get the good and bad that comes with it. Here’s what troubled me in part about that, and troubles me frankly about journalism to some degree today: I had to disclose my finances, and eventually it sort of came out. We got more calls in the Treasury press room about that than about most of the other things we did on autos. My finances had all been vetted, I had no conflicts. It was all just prurient interest—people knowing what I have and don’t have.

“So why is
that how serious journalists want to spend their time, as opposed to trying to figure out how to solve the auto problem? I’m still a journalist at heart. I love journalists. But I don’t think it’s gotten better in the 30 years since I left Washington.” He saves his most withering scorn for blogger Michael Wolff, who once boasted that his seven-year-old son went on a playdate with one of the four children Rattner has with his wife Maureen White, a top Democratic fundraiser, Hillary Clinton loyalist and current state department official. When young Wolff returned from the Rattners’ baronial apartment on Fifth Avenue, the father bragged that he pumped the boy for lurid details of their champagne-and-caviar lifestyle—which he then published.

“He’s the lowest of the low,” Rattner tells me when I ask him about Wolff’s recent assertion that what he did to Rattner was no worse than what Rattner did to Team Obama. “He’s beneath contempt. He used his kid as a leg man!”

Rattner, by contrast, says he informed his administration colleagues when he decided to write the book and conducted 150 interviews. “Without naming names,” he tells me, “I interviewed a number of senior administration officials, and everyone in White House and Treasury was aware that I was doing a book and were fine with it.”

Still, when some of the nasty bits of
Overhaul leaked a few weeks ago, members of Team Obama were doubtless surprised to see that Rattner wrote how the president, often criticized as anti-business, sometimes revealed himself as a community organizer at heart; how Rahm Emanuel essentially ran the treasury department, giving beleaguered Treasury Secretary Timothy Geithner marching orders hour by hour; how White House Press Secretary Robert Gibbs once directed Geithner to phone Rattner for a minute-long chat, just so he could say Geithner was in close touch with the auto task force; how Obama economics guru Larry Summers blew up at Austan Goolsbee (recently named chairman of the Council of Economic Advisers) for questioning his judgment in front of the president, and then attempted to ban him from high-level meetings; how junior treasury aides mocked Summers’ arrogance behind his back; and how Sheila Bair, the George W. Bush-appointed head of the Federal Deposit Insurance Corp., struck Rattner as a self-promoting liar.

Still, Rattner insists that absent the administration restructuring GM, firing its CEO and pouring billions of dollars into the automakers, “there could be no GM or Chrysler, which by the way would mean no Ford, because if the other two shut down, the suppliers would collapse, the whole infrastructure would collapse—so that’s one outcome. The other outcome is that a less determined, less tough administration would just shovel money into these companies that would be going down a rathole. We could have spent tens or hundreds of billions of dollars and got nothing for it.”

Rattner ends our conversation with lavish praise of Obama, whom he calls “an incredibly disciplined and effective” leader. “I’m enormously proud of what the task force did—particularly of the fact the president was willing to do the right thing as opposed to the expedient thing.”

Lloyd Grove is editor at large for The Daily Beast. He is also a frequent contributor to New York magazine and was a contributing editor for Condé Nast Portfolio. He wrote a gossip column for the New York Daily News from 2003 to 2006. Prior to that, he wrote the Reliable Source column for the Washington Post, where he spent 23 years covering politics, the media, and other subjects.